West Bancorporation, Inc. Announces Record Net Income, Declares Quarterly Dividend

WEST DES MOINES, Iowa, Jan. 25, 2018 (GLOBE NEWSWIRE) -- West Bancorporation, Inc. (Nasdaq:WTBA), parent company of West Bank, today reported 2017 net income of $23.1 million, or $1.41 per diluted common share, compared to $23.0 million, or $1.42 per diluted common share for 2016. Net income for 2017 was a record for the Company, even after recording an additional provision for income taxes of $2.3 million in the fourth quarter of 2017. The additional tax provision related to the revaluation of our deferred tax assets as a result of the tax reform bill signed into law on December 22, 2017. Net income for the fourth quarter of 2017 was $4.2 million, or $0.26 per diluted common share. This compares to fourth quarter 2016 net income of $6.0 million, or $0.37 per diluted common share. On January 24, 2018, the Company's Board of Directors declared a regular quarterly dividend of $0.18 per common share. The dividend is payable on February 21, 2018, to stockholders of record on February 7, 2018.

"I am extremely pleased that West Bancorporation, Inc. has again delivered record results," commented Dave Nelson, President and Chief Executive Officer of the Company. "We believe our earnings performance is evidence of our community-focused, relationship-driven business model's success. The primary driver of our increased earnings continues to be our overall loan growth. Management remains committed to achieving a high level of earnings and creating value for our stockholders in an evolving economic and regulatory environment. We are confident in the strength of our balance sheet and capital position."

Brad Winterbottom, West Bank President, said, "We continue to grow our community banking relationships in all of our markets. In 2017, deposit balances increased 17.1 percent and outstanding loan balances grew 7.9 percent. I am particularly pleased with the 30 percent growth in trust revenues. We believe our performance reflects the skill of our team and the quality of the loan portfolio, and that West Bank's risk management practices and capital strength continue to position us well for long-term growth. We approach 2018 with continued confidence in our ability to cultivate quality relationships and deliver excellent service."

Eastern Iowa Market President, Jim Conard, commented, "The Eastern Iowa market achieved record loan production in 2017. We attribute our success in recent years to our ability to bring real value to the people and businesses we serve, and 2017 was no exception. In 2018, we will focus on delivering new and innovative value propositions to the market. We feel this strategy is unique, and we invite any business owner or manager to reach out to us to learn more about how a business relationship with West Bank can impact their company."

"We are very pleased with our strong year in Rochester and plan on carrying that momentum into 2018," said Mike Zinser, Rochester Market President. "Year-end loans outstanding in Rochester increased over 30 percent in 2017, and our deposits increased over 15 percent for the same period. While nearly all of our loan growth was from business banking, much of our deposit growth was from an inflow of personal deposits. New customers are enjoying our high service, concierge-type personal banking program which is similar to our business banking model." Zinser concluded, "We are providing our customers with a comprehensive and unique banking experience that continues to drive our strong growth of loyal customers and market share in Rochester."

The Company will file its annual report on Form 10-K with the Securities and Exchange Commission on or about March 1, 2018. Please refer to that document for a more in-depth discussion of our financial results. The Form 10-K will also be available on the Investor Relations section of West Bank's website at www.westbankstrong.com.

The Company will discuss its financial results on a conference call scheduled for 10:00 a.m. Central Time tomorrow, Friday, January 26, 2018. The telephone number for the conference call is 888-339-0814. A recording of the call will be available until February 9, 2018, by dialing 877-344-7529. The replay passcode is 10115034.

About West Bancorporation, Inc. (Nasdaq:WTBA)West Bancorporation, Inc. is headquartered in West Des Moines, Iowa. Serving Iowans since 1893, West Bank, a wholly-owned subsidiary of West Bancorporation, Inc., is a community bank that focuses on lending, deposit services, and trust services for consumers and small- to medium-sized businesses. West Bank has eight offices in the Des Moines metropolitan area, one office in Iowa City, Iowa, one office in Coralville, Iowa and one office in Rochester, Minnesota.

Certain statements in this report, other than purely historical information, including estimates, projections, statements relating to the Company's business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are "forward-looking statements" within the meanings of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements may appear throughout this report. These forward-looking statements are generally identified by the words "believes," "expects," "intends," "anticipates," "projects," "future," "may," "should," "will," "strategy," "plan," "opportunity," "will be," "will likely result," "will continue" or similar references, or references to estimates, predictions or future events. Such forward-looking statements are based upon certain underlying assumptions, risks and uncertainties. Because of the possibility that the underlying assumptions are incorrect or do not materialize as expected in the future, actual results could differ materially from these forward-looking statements. Risks and uncertainties that may affect future results include: interest rate risk; competitive pressures; pricing pressures on loans and deposits; changes in credit and other risks posed by the Company's loan and investment portfolios, including declines in commercial or residential real estate values or changes in the allowance for loan losses dictated by new market conditions or regulatory requirements; actions of bank and nonbank competitors; changes in local, national and international economic conditions; changes in regulatory requirements, limitations and costs; changes in customers' acceptance of the Company's products and services; cyber-attacks; unexpected outcomes of existing or new litigation involving the Company; and any other risks described in the "Risk Factors" sections of other reports filed by the Company with the Securities and Exchange Commission. The Company undertakes no obligation to revise or update such forward-looking statements to reflect current or future events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
         
WEST BANCORPORATION, INC. AND SUBSIDIARY        
Financial Information (unaudited)        
(in thousands)        
         
CONSOLIDATED BALANCE SHEETS   December 31, 2017   December 31, 2016
Assets        
Cash and due from banks   $ 34,952     $ 40,943  
Federal funds sold   12,997     35,893  
Investment securities available for sale, at fair value   444,219     260,637  
Investment securities held to maturity, at amortized cost   45,527     48,386  
Federal Home Loan Bank stock, at cost   9,174     10,771  
Loans   1,510,500     1,399,870  
Allowance for loan losses   (16,430 )   (16,112 )
Loans, net   1,494,070     1,383,758  
Premises and equipment, net   23,022     23,314  
Bank-owned life insurance   33,618     33,111  
Other assets   16,798     17,391  
Total assets   $ 2,114,377     $ 1,854,204  
         
Liabilities and Stockholders' Equity        
Deposits:        
Noninterest-bearing   $ 395,888     $ 479,311  
Interest-bearing:        
Demand   395,052     282,592  
Savings   850,216     668,688  
Time of $250 or more   16,965     10,446  
Other time   152,692     105,568  
Total deposits   1,810,813     1,546,605  
Short-term borrowings   545     9,690  
Long-term borrowings   119,711     125,410  
Other liabilities   5,210     7,123  
Stockholders' equity   178,098     165,376  
Total liabilities and stockholders' equity   $ 2,114,377     $ 1,854,204  
                 

             
WEST BANCORPORATION, INC. AND SUBSIDIARY            
Financial Information (continued) (unaudited)                
(in thousands)                
                 
    Three Months Ended December 31,   Year Ended December 31,
CONSOLIDATED STATEMENTS OF INCOME   2017     2016     2017     2016  
Interest income                        
Loans, including fees   $ 16,377     $ 14,752     $ 63,242     $ 57,419  
Investment securities   3,032     1,763     9,461     7,467  
Other   108     50     331     108  
Total interest income   19,517     16,565     73,034     64,994  
Interest expense                
Deposits   2,538     990     7,622     3,391  
Short-term borrowings   17     4     99     47  
Long-term borrowings   1,418     1,146     5,256     4,438  
Total interest expense   3,973     2,140     12,977     7,876  
Net interest income   15,544     14,425     60,057     57,118  
Provision for loan losses       100         1,000  
Net interest income after provision for loan losses   15,544     14,325     60,057     56,118  
Noninterest income                
Service charges on deposit accounts   686     614     2,632     2,461  
Debit card usage fees   421     453     1,754     1,825  
Trust services   441     364     1,705     1,310  
Increase in cash value of bank-owned life insurance   168     155     652     647  
Gain from bank-owned life insurance           307     443  
Realized investment securities gains (losses), net   (97 )   6     326     66  
Other income   289     338     1,272     1,230  
Total noninterest income   1,908     1,930     8,648     7,982  
Noninterest expense                
Salaries and employee benefits   4,417     4,087     17,633     16,731  
Occupancy   1,091     1,061     4,406     4,033  
Data processing   646     661     2,677     2,510  
FDIC insurance   163     223     677     937  
Other expenses   1,715     1,505     6,874     6,937  
Total noninterest expense   8,032     7,537     32,267     31,148  
Income before income taxes   9,420     8,718     36,438     32,952  
Income taxes   5,226     2,687     13,368     9,936  
Net income   $ 4,194     $ 6,031     $ 23,070     $ 23,016  
                                 

     
WEST BANCORPORATION, INC. AND SUBSIDIARY    
Financial Information (continued) (unaudited)                
             
    PER COMMON SHARE   MARKET INFORMATION (1)
    Net Income            
    Basic   Diluted   Dividends   High   Low
2017                              
4th Quarter   $ 0.26     $ 0.26     $ 0.18     $ 28.00     $ 23.40  
3rd Quarter   0.40     0.39     0.18     24.75     20.90  
2nd Quarter   0.39     0.39     0.18     24.60     21.40  
1st Quarter   0.38     0.37     0.17     24.90     20.60  
                     
2016                    
4th Quarter   $ 0.37     $ 0.37     $ 0.17     $ 25.05     $ 18.75  
3rd Quarter   0.36     0.36     0.17     20.52     17.65  
2nd Quarter   0.34     0.34     0.17     19.65     17.33  
1st Quarter   0.35     0.35     0.16     19.58     16.04  

(1) The prices shown are the high and low sale prices for the Company's common stock, which trades on the Nasdaq Global Select Market under the symbol WTBA. The market quotations, reported by Nasdaq, do not include retail markup, markdown or commissions.
         
    Three Months Ended December 31,   Year Ended December 31,
SELECTED FINANCIAL MEASURES   2017   2016   2017   2016
Return on average assets   0.80 %   1.30 %   1.18 %   1.27 %
Return on average equity   9.31 %   14.53 %   13.29 %   14.35 %
Net interest margin   3.25 %   3.43 %   3.37 %   3.49 %
Efficiency ratio*   43.81 %   44.38 %   45.39 %   46.03 %
                 
        As of December 31,
            2017   2016
Texas ratio*           0.32 %   0.56 %
Allowance for loan losses ratio           1.09 %   1.15 %
Tangible common equity ratio           8.42 %   8.92 %

* A lower ratio is more desirable.

Definitions of ratios:

  • Return on average assets - annualized net income divided by average assets.
  • Return on average equity - annualized net income divided by average stockholders' equity.
  • Net interest margin (1) - annualized tax-equivalent net interest income divided by average interest-earning assets.
  • Efficiency ratio (1) - noninterest expense (excluding other real estate owned expense) divided by noninterest income (excluding net securities gains and gains/losses on disposition of premises and equipment) plus tax-equivalent net interest income.
  • Texas ratio - total nonperforming assets divided by tangible common equity plus the allowance for loan losses.
  • Allowance for loan losses ratio - allowance for loan losses divided by total loans.
  • Tangible common equity ratio - common equity less intangible assets (none held) divided by tangible assets.

(1) Non-GAAP measures - see reconciliation below.

NON-GAAP FINANCIAL MEASURES

This report contains references to financial measures that are not defined in generally accepted accounting principles (GAAP). The following table reconciles the non-GAAP financial measures of net interest income, net interest margin and efficiency ratio on a fully taxable equivalent (FTE) basis to GAAP.
         
    Three Months Ended December 31,   Year Ended December 31,
    2017   2016   2017   2016
Reconciliation of net interest income and annualized net interest margin on an FTE basis to GAAP:                        
Net interest income (GAAP)   $ 15,544     $ 14,425     $ 60,057     $ 57,118  
Tax-equivalent adjustment (1)   785     629     2,677     2,623  
Net interest income on an FTE basis (non-GAAP)   $ 16,329     $ 15,054     $ 62,734     $ 59,741  
Average interest-earning assets   $ 1,990,776     $ 1,747,080     $ 1,863,791     $ 1,711,612  
Net interest margin on an FTE basis (non-GAAP)   3.25 %   3.43 %   3.37 %   3.49 %
                 
Reconciliation of efficiency ratio on an FTE basis to GAAP:                
Net interest income on an FTE basis (non-GAAP)   $ 16,329     $ 15,054     $ 62,734     $ 59,741  
Noninterest income   1,908     1,930     8,648     7,982  
Less: realized investment securities (gains) losses, net   97     (6 )   (326 )   (66 )
Plus: losses on disposal of premises and equipment, net       4     25     4  
Adjusted income   $ 18,334     $ 16,982     $ 71,081     $ 67,661  
Noninterest expense   $ 8,032     $ 7,537     $ 32,267     $ 31,148  
Efficiency ratio on an adjusted and FTE basis (non-GAAP) (2)   43.81 %   44.38 %   45.39 %   46.03 %

(1) Computed on a tax-equivalent basis using an incremental federal income tax rate of 35 percent, adjusted to reflect the effect of the nondeductible interest expense associated with owning tax-exempt securities and loans.(2) Efficiency ratio expresses noninterest expense as a percent of fully taxable equivalent net interest income and noninterest income, excluding specific noninterest income and expenses. Management believes the presentation of this non-GAAP measure provides supplemental useful information for proper understanding of the financial results, as it enhances the comparability of income and expenses arising from taxable and nontaxable sources.

For more information contact:Doug Gulling, Executive Vice President, Treasurer and Chief Financial Officer (515) 222-2309

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